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Nepal bans new Indian currency notes

Nepal Rastra Bank on Thursday banned the use of India's new currency notes of Rs 500 and Rs 2,000 denomination, terming them "unauthorised and illegal".
●    These two currency notes were issued by the Reserve Bank of India recently after old Rs 500 and Rs 1,000 denomination notes were withdrawn.
●    Nepal Rastra Bank (NRB) has called the new currency notes "unauthorised and illegal".
●    NRB spokesperson Narayan Poudel said these new currency notes are not yet legal in Nepal.
●    Poudel said these notes will be legal in Nepal only when India issues a FEMA notification as per the Foreign Exchange Management Act.
●    India is likely to issue a FEMA notification, allowing people in Nepal and India to possess certain amount of Indian currency.
●    Earlier, a ban was in effect in Nepal till last year against the use of Rs 500 and Rs 1,000 denominations notes.

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Rupee drops lowest since Aug 2013

Indian rupee hit its record low level of 68.855 against the US dollar during the intraday trade on Thursday after extending its loses for a fifth consecutive session. 
●    Sentiment in forex market turned highly weak due to consistent selling by foreign investors against the backdrop of demonetisation and renewed concerns over Fed interest rate hike. 
●    The currency opened nearly 22 paise down at 68.78 against dollar on account of buying of American currency by banks and importers. 
●    At 1.10 pm, the local currency was trading 26 paise down at 68.83. 
●    Since demonetisation, rupee has already plunged over 2.5 per cent till date. 
●    The Reserve Bank of India on Wednesday fixed the reference rate of the rupee at 68.47 against the US dollar and 72.7844 for the euro. 
●    domestic equity market was also trading in red in afternoon trade tracking mixed global cues. The BSE Senex was trading 137.89 points, or 0.53 per cent down at 25,913.92, while NSE Nifty was down 45.55 points, or 0.57 per cent, down at 7987.75. 


 

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Goldman predicts dip in GDP Growth to 6.8% in FY17 post-demonetisation

Goldman Sachs has forecast a deceleration in India’s GDP growth to 6.8 per cent this fiscal, down from 7.6 per cent last financial year, due to demonetisation. 
●    According to Goldman Sachs, post the ‘dramatic currency reform’ the liquidity shortage would be a significant constraint on domestic activity, which in turn would affect GDP growth.
●    “In the short term, the liquidity shortage appears likely to be a significant constraint on domestic activity, leading us to forecast a deceleration in GDP growth to 6.8 per cent in FY17 (below consensus), down from 7.6 per cent in FY16,” Goldman Sachs said in a research note.
●    Eventually, the currency reform should help to move economic activity into formal channels, accelerate financial inclusion, and increase government revenue. 
●    According to the report, the “large, young, lower-income” economies of India, Indonesia, and the Philippines have higher growth potential — in theory. 
●    But in practice, much will depend on domestic policy and the pace of economic reform.
 

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82,000 ATMs recalibrated, new incentives announced for Rabi season

Acknowledging that farmers have been among the hardest hit by the cash crunch due to demonetisation, the Union government on Wednesday announced a special window of Rs. 21,000 crore to district central cooperative banks to ensure smooth agriculture-related operations during the current rabi season.
●    The government also began a new phase of its demonetisation policy and efforts to make the economy less dependent on cash by boosting digital transactions.
●    Economic Affairs Secretary Shaktikanta Das told that the Rs. 21,000 crore would enable these banks to sanction and disburse crop loans to farmers through the network of primary agricultural cooperative societies.
●    He said nearly 82,000 of the 2.2 lakh ATMs in the country had been recalibrated to dispense new currency, adding that within a few days the remaining ones would be covered. 
●    On seizures of unaccounted-for cash, Mr. Das said the Revenue Department would soon make a statement on the exact quantum. 
●    He said the currency printing presses were working at full capacity in three shifts to replenish the notes.

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SEBI eases rules for angel funds

The Securities and Exchange Board of India (SEBI) has liberalised norms for angel funds to invest in early-stage entities as part of its attempts to facilitate fund-raising for start-ups.
●    The capital markets regulator also enhanced the scope of investment of foreign investors in unlisted debt securities.
●    The board in its meeting decided to amend the SEBI (Alternative Investment Funds) Regulations, 2012 based on the recommendations received from the 'Alternative Investment Policy Advisory Committee' that was constituted under the chairmanship of N. R. Narayana Murthy.
●    The regulator has increased the upper limit for number of angel investors in a scheme from forty nine to two hundred.
●    Angel Funds will also be allowed to invest in start-ups incorporated within five years instead of the earlier norm of three years.
●    The requirements of minimum investment amount by an angel fund in any venture capital undertaking has been reduced from Rs.50 lakh to Rs.25 lakh. 
●    Further, the lock-in requirements of investment made by angel funds in the venture capital undertaking has been reduced from three years to one year.


 

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RBI increases monthly wallet limit from Rs. 10,000 to 20,000

The government of India’s demonetisation drive has come as a boost for mobile wallet players like Paytm, MobiKwik, FreeCharge and others. 
●    Now RBI has increased the monthly wallet limit for users to Rs 20,000 from the earlier Rs 10,000 and to Rs 50,000 for merchants. 
●    The move is being hailed by wallet players as one that will help out users and sellers who have adopted these wallets due to the demonetisation move.
●    In a circular dated November 22, RBI has said it will increase “enhancement in issuance limits for Pre-Paid Payment Instruments (PPIs) in India,” along with special measures for merchants. 
●    While earlier the limit for mobile wallets was Rs 10,000 for non-eKYC compliant account, it has now been increased to Rs 20,000. 
●    RBI’s circular says “The total value of reloads during any given month shall also not exceed 20,000,” which means per month people can upload up to Rs 20,000 in their mobile wallets.

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Islamic Window to be considered in conventional banks

The Reserve Bank of India (RBI) in a letter to the finance ministry has put forward a proposal to open an ‘Islamic window’ in conventional banks. The move is a stepping stone to its consideration of introducing Islamic banking in the country. 
●    The RBI and the Union Government have been exploring the possibility of  introducing the Sharia-based foundation since quite long in order to include even those sections of the society that remain outside the banking circuit due to religious reasons. 
●    The information was revealed when a copy of the letter was sent to Press Trust of India, in response to an RTI filed by it.  
●    Islamic banking may be introduced in the country in a gradual manner, considering the inexperience of Indian banks in the sphere and complexities of Islamic finance. 
●    At first, only products similar to those of conventional banking will be considered for introduction through an Islamic window at the conventional banks.
●    The full-fledged introduction of Islamic banking will be considered at a later stage, based on the experience gained during the time. 


 

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GST Dual Control Meet remains inconclusive - Meet again on Nov 25 

After nailing a four-tier rate structure of 5, 12, 18 and 28 per cent, the GST Council yet again on Friday failed to arrive at a consensus over which category of assessees should be governed by the Centre and which by states, a disagreement that threatens to derail the April 1 target for rollout of the new indirect tax regime.
●    Jaitley, who had previously stated that he hoped for all modalities for the GST to be finalised by November 22, was still hopeful of getting the supporting legislations during the ensuing Winter Session of Parliament from November 16.
●    Differences on the issue of cross empowerment to avoid dual control arose with states demanding control over 11 lakh service tax assessees, and Centre proposing to do away states having exclusive control over all dealers up to an annual revenue threshold of `1.5 crore -- an issue which was settled in the first meeting of the GST Council.
●    The GST Council meetings, earlier called for November 9 and 10, have been scheduled to meet on November 24 and 25. 
●    Speaking on the draft CGST , SGST and IGST legislations, the minister said, Jaitley said it will be sent to states after November 15 and the GST Council in November 24-25 meeting will approve them. 


 

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GHMC top in 22 cities in tax collection

The demonetisation of high-value currency notes has brought in revenue windfall for the GHMC (Greater Hyderabad Municipal Corporation). 
●    The city’s civic body has topped in tax collection among 22 other cities in the country in the month of November. 
●    While the tax collection of GHMC was Rs 8 crores in November 2015, it rose to Rs 188 crore this year in the first 19 days of the month.
●    The payments picked up pace after the government announced on November 10 that taxes and utilities bills can be paid with the banned notes. 
●    On November 11, the GHMC received 3,2549 transactions worth Rs.54.52 crore. 
●    Some of the corporations which were analysed include Agra, Ahmedabad, Kakinada, Vijayawads, Indore, Vishakapatnam, Guahati, Ranchi, Faridabad, Coimbatore, Jaipur, Chennai and Lucknow. 
●    While the combined property tax collection in November 2015 of these corporations was Rs.274 crore, an amount of Rs.855 crore during this year has already been collected. 

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NBFCs and MFIs cripple under Demonetisation

Micro-finance institutions (MFIs) and non-banking finance companies (NBFCs) could face challenges in mobilising monthly collections from their small retail customers after the government’s move to withdraw Rs 500 and Rs 1,000 notes. 
●    MFIs lending to rural customers without access to bank branches and post offices may see some near term difficulty in collections.
●    NBFC-MFIs and small finance banks (SFBs) may not be significantly impacted in the long term considering the cash flows of the borrower segment are usually in the smaller denomination. 
●    NBFCs catering to self-employed segments, SMEs and other small businesses which transact primarily in cash, may experience near term delays in payment due to difficulties by these customers in converting their holdings within the stipulated time. 
●    Housing finance companies (HFCs) catering to the self-employed segment, particularly in small ticket loans may also experience payment delays.
●    Similarly, loan against property (LAP) business faces asset quality risk because of aggressive lending practices of many banks and NBFCs. 
●    In this case, unaccounted income is taken into consideration while deciding on income eligibility and loan amount for a borrower.

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